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March 7, 2025 - Freedomain Radio - Stefan Molyneux
07:05
The Ripple Effects of a Trade War!
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So, with a trade war, it goes something like this.
If there was a free market, I could understand the argument against tariffs.
However, let's say China subsidized like crazy, subsidizes its steel industry like crazy, right?
So then steel can be sold very cheaply into the United States.
Now, the problem is, when steel is sold very cheaply when it's subsidized and it goes into the United States, the steel industry in the United States Staggers and collapses.
That's a huge deal.
Because now you're dependent upon China, a hostile power, for your steel.
That's very bad.
Also, of course, who pays the social costs of massive unemployment in what used to be the manufacturing belt, and that is now the rust belt?
Well, who pays the price is obviously the people, but it's the taxpayers.
It's the government, really.
It's the future generations because of debts and deficits.
So what happens is, A hundred thousand people lose their jobs in America.
Then what?
Well, the government has to pay a hundred thousand times unemployment insurance, right?
And it has to pay a hundred thousand times welfare.
Oh, and don't you know, if those hundred thousand people probably tend...
Oh, my neck.
Oh, jeez.
Oh, my neck hurts, man.
Oh, I think I've got whiplash.
Oh, yeah.
So they just go on disability, right?
And then they stay on disability forever instead of paying taxes.
They're now taking taxes.
Also, When people lose their jobs, they tend to get kind of depressed.
They tend to sit around a lot.
They don't have a gym membership anymore because that's expensive.
And they don't have tennis clubs memberships because that's expensive.
So they kind of sit around, eat badly, and they get depressed, and they gain weight, and they get less healthy.
So then you have additional bills.
Also, when men lose their jobs, in particular, there are lots of divorces.
So if there are lots of divorces, that's very expensive for society as a whole, right?
I mean, there's trauma for the kids.
There is, well, now you need two residences instead of one that drives up the price of housing, and there's lots of conflicts which lawyers drives up the price of lawyers, so lawyers are less available for other people.
I mean, the ripple effects of 100,000 people losing their jobs in a semi-socialist economy like America has, or really most of the Western, all of the Western countries have, the ripple effects are huge.
Some people who are older and they lose their jobs, They may choose to take early retirement.
So instead of paying taxes, like they're 55, they retire at 55 because it's just too hard to get a job at 55. You can't retrain that easily and nobody wants you if you're 55, right?
So a lot of people, instead of paying taxes until they were 65, they retire and now they're drawing resources.
I mean, maybe not Social Security, which you can't get until your early 60s, I think, but they're still not paying taxes and they're drawing resources away, right?
So, there is a massive ripple effect that goes through the entire American economy.
It's not just 100,000 people no longer paying taxes.
It's 100,000 people no longer paying taxes, drawing medical resources, drawing housing resources through divorce, and they are drawing unemployment insurance and welfare and disability because, oh, my neck, man, it's killing me, right?
So, the ripple effect is absolutely monstrous.
If you allow a foreign country like China to subsidize its steel industry, your steel industry gets destroyed.
And all of those skills scatter, right?
People retrain, they retire, they go elsewhere, they move back home to some other country if that's where they came from.
And the factories fall into disrepair and get aged and so on, right?
So then, after China having subsidized its steel industry, Has destroyed your steel industry, then what China can do is it can crank up the price of steel, right?
And you can't compete because you've destroyed your entire domestic steel industry.
So it is a massive catastrophe.
Oh, also, not to mention, but also, when people are unemployed, they tend to get depressed and anxious, and they go through very tough times.
Their health gets bad.
Their marriage is under the rocks or on the rocks or divorced.
So what happens is they start taking drugs.
I mean, you know the Rust Belt.
You follow the hollowing out of the American manufacturing environment.
You hollow that out and the drugs come in.
And the drugs come in.
And, of course, because we have welfare and we have unemployment insurance, people don't tend to move.
So you've got, I mean, I remember this in northern Ontario when I worked up there.
There were entire towns where the mine closed down like decades ago.
But people are still there.
Normally they should move to some other place where there's economic activity, but they kind of get stuck like a fly in amber.
They get stuck.
You know, like some guy frozen in the wall of a glacier from the ice age 10,000 years ago.
They just get stuck.
Also, when there's unemployment and there are drugs and there is lots of government money sloshing around, you get the breakdown of the family unit.
You start to get a lot of births outside of wedlock because the men aren't needed anymore because the women are getting all their money.
From the government.
So there's just a massive ripple effect that has a huge impact on the society as a whole.
And then you end up under the thumb of a corrupt communist, but I repeat myself, government.
Say China, could be other places.
And your entire industry is gone and you can't bring it back.
That's the problem.
Once you kill an industry, it's really hard to bring it back.
Why?
For a number of reasons.
The capital machinery has all decayed or been pillaged off and sold for parts.
How do you get new stuff?
It's gone.
The 100,000 workers died, retired, retrained, moved away, whatever it is.
So you lose all of that expertise and that skill set, right?
Decades to get a highly functioning team and an efficient supply chain in the manufacturing.
Now, I know a little bit about manufacturing, of course, because I sold a lot of the software that I wrote was sold, or I sold it into, you know, Fortune 500 manufacturing companies.
You'd know them all.
I won't list them.
It doesn't really matter.
But yeah, you would know them all.
So I got lots of tours of manufacturing facilities.
I got...
Lots of training and had to read up a lot and watch a lot of videos on training for manufacturing because I needed to know who I was selling into.
And there's this thing called just-in-time manufacturing where if you're making a car and you need the steering wheel, you don't want to store the steering wheel.
You don't want to store 10,000 steering wheels because that's very expensive.
So you reach, and I remember a guy describing it to me, what they want is you reach for that steering wheel, it only materializes when they reach for it, in the moment that they reach for it.
It's called JIT or Just In Time.
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